Woolworths and Aldi under fire from ACCC

Unfair treatment alleged

Last updated: 24 September 2015

Supermarket giants Woolworths and Aldi may not be playing by the rules when it comes to negotiating trade agreements with suppliers.

The ACCC regulates the Food and Grocery Code of Conduct – the manner in which grocery retailers deal with their suppliers. ACCC chairman Rod Sims said the aim of the Code is to compensate for the imbalance in bargaining power that sometimes exists between suppliers and large grocery retailers by prohibiting certain types of unfair conduct.

"One of the purposes of the Code is to provide certainty to suppliers who are often in a much weaker bargaining position when dealing with retailers," said Sims. "In order to provide that certainty, the ACCC expects retailers to set out the circumstances in which they will seek payments from suppliers."

The key protections in the Code include that:

Retailers will write grocery supply agreements (GSAs) and then terms can be negotiated by both parties

All parties will act lawfully and in good faith

Retailers are prohibited from threatening suppliers without reasonable grounds

Minimum standards of conduct must be established

Retailers and wholesalers must provide annual employee training on the requirements of the Code.

Mr Sims said both supermarket chains are presenting new GSAs that may give the impression that the supplier is not able to negotiate the terms. The agreement is voluntary between the supplier and retailer, and must set out:

delivery requirements

the circumstances in which the retailer or wholesaler can reject the groceries

the payment period and circumstances in which payment must be withheld or delayed

the term of the agreement

any quantity or quality requirements

the circumstances (if any) in which the agreement may be terminated.

Greens Senator Nick McKim commented on the inadequacy of the voluntary code, saying the government needs to step in and make the code mandatory.

"Unfortunately for their suppliers, the big supermarkets are continuing to abuse their dominant market position," he said.